US Slump to Prop Up India as Next Offshoring Hotspot ("Dude, Where's My Job?!")

Economic Times of India ^ | Chiranjoy Sen

[AmericanInTokyo]

US slump to prop up India as next offshoring hotspot 14 May, 2008, 0750 hrs IST,Chiranjoy Sen, TNN

BANGALORE: Belt-tightening by global technology giants—a fallout of US economic slowdown—is likely to reinforce India as the most preferred offshoring destination. Top technology firms are actively moving part of their workforce from the US, UK and European markets to lower-cost destinations.

They cite availability of local talent, better delivery and conducive enviroment as key offshoring reasons. While they may not admit it, firms would be looking at stepping the gas on offshoring to curb bloating costs and to lift margins.

Networking and telecom software major Nortel, for one, has recently decided to move almost 1,000 jobs from the US and the UK to low-cost , high-growth destinations like India, China and Mexico. The move is aimed at both restructuring business and reducing costs, Nortel Networks global services president Dietmar Wendt told ET.

The company plans to double its $2.1-billion global services business over the next three to five years with a significant portion coming from multimedia and contact centre services. “India is critical to grow the business and the largest percentage of the job shift will be to India, ” says Wendt.

For Andy Green, who took over as Logica CEO in January, two of the main drivers to revitalise the firm has been to double offshore and nearshore headcount to 8,000 by end 2009; and a significant drop in costs resulting from a reduction of 3% of overall headcount.

And, the lynchpin of this strategy, which is expected to drive Logica’s growth to above-market levels from end of 2008, will be the 1,500-seater second site at Chennai. The plan to deliver abovemarket growth is funded by a £110 million restructuring that will lead to cost savings reaching an annualised £80 million from 2010.

To boot, software services major CSC had announced sometime back that it was shifting more UK jobs offshore in an effort to control costs. “Moving positions to India will give software companies higher leverage on costs but there are other key business drivers such as focus on revenue creation, increasing productivity and efficiency that will be a major determinant of the shift, ” says Symphony Services managing director Ajay Kela.

[Non-Sequitur]

Dodging the continent for cheap labor means a lot of engineers have put their time and money into a a degree with little hope for a return on their investment.

And future generations of engineers and IT people will be discouraged from pursuing the degrees for the same reason. We'll become a nation of lawyers and salepeople. The arguement used to be that it was the old jobs going overseas and why protect the buggy whip industry when we should be preparing for the 21st century. Well, those 21st century jobs are all going overseas as well. Usually starting there.